Lack of Jurisdiction Over Underlying Action No Bar to Lawyers’ Bid for
Payment, Justices Hold

By
KENNETH OFGANG, Staff Writer/Appellate Courts

A
foreign corporation that retains California
lawyers to represent it in California
courts may be sued in this state even if the underlying action was dismissed
for lack of personal jurisdiction, the Court of Appeal for this district ruled
yesterday.

Div.
Four overturned a ruling of Los Angeles Superior Court Judge Alan Buckner,
since deceased, and reinstated a suit by the downtown Los
Angeles law firm of Daar &
Newman against VRL International, which operates the Breezes Hotel in Nassau,
Bahamas.

While
California
courts lacked general jurisdiction over VRL, a foreign corporation lacking
minimum contacts in the state, they had specific jurisdiction to hear Daar
& Newman’s suit, Justice J. Gary Hastings explained for the Court of
Appeal.

Jet
Ski Accident

VRL
retained the law firm after it was sued here by David Cuenllas, who suffered
major injuries in a jet ski accident in the ocean off the Bahamas.
Cuenllas alleged that he was a guest at the defendant’s hotel, and that he had
been encouraged by the hotel to rent a jet ski from an operator adjacent to its
property.

VRL,
a Cayman Islands
corporation, was served with the summons and complaint through its agent in the
Bahamas.
Following its retention, Daar & Newman undertook the corporation’s defense,
including the filing of a motion to quash service for lack of personal
jurisdiction.

In
support of the motion, the firm presented evidence that VRL has no agent in California,
employs no California
workers, has no Californians among its officers and directors, pays no California
taxes, owns no California
property and solicits no business in this state.

The
plaintiff responded by arguing that VRL should be subject to suit in California
because its agent and co-defendant, International Lifestyles—a Florida
corporation which was also represented by Daar & Newman but was not a party
to the appeal decided yesterday—had solicited business in California and had
sent brochures to the plaintiff before he departed on his trip to Nassau.

No
Minimum Contacts

The
motion to quash was granted on the ground that the purported advertising did
not constitute minimum contacts and that the lack of a link between the
advertising and the alleged injuries precluded a finding of specific
jurisdiction. The Court of Appeal affirmed in an unpublished opinion.

Daar
& Newman sued VRL and International Lifestyles for nearly $72,000 in unpaid
fees. Buckner granted the defendants’ motion to quash “on the basis of the
finding and holding of the Court of Appeal in the underlying...action, as well
as the doctrine of judicial estoppel.”

The
trial judge had it wrong, Hastings
wrote for the Court of Appeal.

“At
the outset, we conclude that the trial court was wrong in relying upon our
prior opinion as a basis for granting the motion to quash in this case,” the
justice explained. “Whether the court’s terse language was meant to refer to
the doctrines of law of the case or res judicata, or each of them, neither
apply here.”

While
the judgment in the Cuenllas action might arguably preclude Daar & Newman
from contending that California
had general jurisdiction over VRL, Hastings
explained, the firm made no such argument. The doctrine of judicial estoppel,
which generally precludes a party which prevailed in an earlier proceeding from
taking a “totally inconsistent” legal position in a later one, does not apply
because Daar & Newman’s positions were not inconsistent, the justice said.

Specific
Jurisdiction

“Because
appellant’s argument for specific
jurisdiction is based on a different claim and different facts, it is not
inconsistent with the argument it made on behalf of respondent in the Cuenllas action,” Hastings
wrote.

Turning
to the merits, Hastings
said there was specific jurisdiction over the firm’s claim for fees.

VRL,
the justice explained, chose to invoke the protection of the California
courts, rather than risk allowing a default judgment to be taken and then
defending against its enforcement on the ground that California
lacked jurisdiction. Having done so, it subjected itself to the potential that
its lawyers would sue for their fees, Hastings
said.